Quarterly report pursuant to Section 13 or 15(d)

FEDERAL INCOME TAXES

v3.22.1
FEDERAL INCOME TAXES
 3 Months Ended
Mar. 31, 2022
FEDERAL INCOME TAXES [Abstract]  
FEDERAL INCOME TAXES
NOTE 9 - FEDERAL INCOME TAXES

Income tax expense was as follows (dollars in thousands):

   
Three Months
Ended
March 31, 2022
    
Three Months
Ended
March 31, 2021
  
Current
  
$
935
    
$
2,294
  
Deferred
    
456
   
(528
)
   
$
1,391
    
$
1,766
  

The difference between the financial statement tax expense and amount computed by applying the statutory federal tax rate to pretax income was reconciled as follows (dollars in thousands):

   
Three Months
Ended
March 31, 2022
    
Three Months
Ended
March 31, 2021
  
Statutory rate
    
21
 %    
21
 %
Statutory rate applied to income before taxes
  
$
1,552
    
$
2,004
  
Deduct
                
Tax-exempt interest income
    
(154
)
    
(159
)
Bank-owned life insurance
    
(50
)
    
(58
)
Other, net
    
43
      
(21
)
   
$
1,391
    
$
1,766
  

The realization of deferred tax assets is largely dependent upon future taxable income, future reversals of existing taxable temporary differences and the ability to carryback losses to available tax years. In assessing the need for a valuation allowance, we consider positive and negative evidence, including taxable income in carry-back years, scheduled reversals of deferred tax liabilities, expected future taxable income and tax planning strategies.  Management believes it is more likely than not that all of the deferred tax assets at March 31, 2022 will be realized against deferred tax liabilities and projected future taxable income.

The net deferred tax asset recorded included the following amounts of deferred tax assets and liabilities (dollars in thousands):

   
March 31,
2022
    
December 31, 2021
 
Deferred tax assets
            
Allowance for loan losses
  
$
3,069
    
$
3,337
  
Net deferred loan fees
    
59
    

275
  
Nonaccrual loan interest
    
44
      
57
  
Valuation allowance on other real estate owned
    
6
      
6
  
Unrealized loss on securities available for sale and transferred to held to maturity
    
3,231
      
79
  
Other
    
324
      
311
  
Gross deferred tax assets
    
6,733
      
4,065
  
Valuation allowance
    
—
      
—
  
Total net deferred tax assets
    
6,733
      
4,065
  
Deferred tax liabilities
                
Depreciation
    
(1,176
)
    
(1,199
)
Prepaid expenses
    
(288
)
    
(288
)
Other
    
(410
)
    
(415
)
Gross deferred tax liabilities
    
(1,874
)
    
(1,902
)
Net deferred tax asset
  
$
4,859
    
$
2,163
  

There were no unrecognized tax benefits at March 31, 2022 or December 31, 2021 and the Company does not expect the total amount of unrecognized tax benefits to significantly increase or decrease in the next twelve months. The Company is no longer subject to examination by the Internal Revenue Service for years before 2019.